Key takeaways
- Understand the mortgage process when it comes to buying a home with poor credit.
- Explore different programs available to help teachers qualify for a mortgage.
Can you get a home loan with bad credit?
While purchasing a home with bad credit can be more complicated, it is not impossible. While most home mortgage lenders look for credit scores above 620, there are programs available for those with lower credit scores and poor credit history. However, in exchange for the greater risk, these loans often come with higher interest rates that can increase your monthly mortgage payments and your risk of default.
5 best home loan programs for teachers with bad credit
As a teacher with credit challenges, you may assume that home ownership is not possible. The fact is this couldn’t be further from the truth. Many teacher mortgage programs exist that can provide anything from grants requiring no payback to down payment assistance, discounted fees, and, in some programs, as much as a 50% discount off the listed home price. Here we take a look at some of the top home loan programs and loan options available for teachers to consider.
1. Teacher Next Door Program
The Teacher Next Door program is a part of the largest National Home Buying Program in the United States and offers everything from grants to down payment assistance for teacher loans.
Eligibility
The Teacher Next Door program is open to all classroom school teachers teaching Pre-K through 12th grade in both public and private schools, college and university professors, and school support staff and administration.
Advantages and disadvantages
- Grants as high as $8k in qualifying areas with no repayment needed
- Down payment assistance up to $10,681
- Lower interest rates and monthly payments
- Discounted or waived fees
- Free home appraisals
- Ability to enroll in credit counseling
- Will work with Fannie Mae’s HomeReady and Freddie Mac’s Home Possible programs, as well as the Good Neighbor Next Door Programs
Requirements
To qualify for any benefits through this program, buyers must work directly with a Teacher Next Door agent and borrow within their lending network.
2. Good Neighbor Next Door
The Good Neighbor Next Door program is a home financing program that is funded through the Department of Housing and Urban Development or HUD.
Eligibility
A full-time teacher or public servant working in a revitalization area
Advantages and disadvantages
- A 50% discount off the listing price of a HUD home
- Must live in the home for a minimum of 3 years
Requirements
In order to qualify for the Good Neighbor Next Door mortgage, you must work and plan to purchase a home in a revitalization area and you must commit to living in this home as your primary residence for a minimum of three years while maintaining regular loan payments.
3. Government-backed mortgages
There are a variety of different government-backed mortgage programs designed to provide assistance to low to median-income home buyers looking to purchase affordable housing. These different types of loans can include FHA loans, VA loans, and USDA loans.
Eligibility
FHA loans are open to anyone, while VA loans are available only for veterans and eligible active-duty military personnel and USDA loans are available for low-income to middle-income borrowers in specific rural and suburban areas.
Advantages and disadvantages
- Little to no down payment requirements
- Credit scores as low as 580 accepted
- Secured by the federal government
- Home must meet specific requirements
- Debt-to-income ratio of 43% or less
- Low interest rates
- Private mortgage insurance is required
Requirements
There are no requirements needed to apply for an FHA loan. For a USDA loan, your home must be located in an approved rural location and meets the area’s median income guidelines. For a VA loan, you must be a veteran or eligible active-duty personnel.
4. Educator Mortgage Program
The Educator Mortgage Program is a program offered through Supreme Lending that helps reduce the closing costs and real estate agent fees associated with the purchase of your new home.
Eligibility
This program is open to all teachers and support staff in public and private schools.
Advantages and disadvantages
- Provides as much as $1600 to pay toward closing costs and real estate agent fees (actually amount works out to 0.2% of your loan amount)
- Requires a credit score of 620 or above
- Cannot be used with any other down payment assistance programs
- Must use Supreme Lending for your loan
Requirements
This program is only available for teachers and support staff using Supreme Lending for their mortgage loans. Supreme lending requires a minimum credit score of at least 620.
5. Down Payment Assistance Programs
There are many organizations around the country that offer home buyer assistance programs that provide down payment assistance. These programs can be run by federal, state, and local governments, as well as local charity associations and nonprofit organizations. The Teacher Next Door Program, as well as others, can often provide you with a list of local down payment assistance programs in your area.
Eligibility
Each down payment assistance programs have its own set of eligibility requirements, and you will need to consult with each program individually.
Advantages and disadvantages
- Grants requiring no payback available
- Low-interest loans of forgivable loans available
- May take time to find available programs in your area
- Must apply to each available program individually and meet their specific requirements
Requirements
Each down payment assistance programs have its own set of loan requirements so you will need to check with each one independently.
Exploring these programs can help you achieve home ownership
If you qualify for any of these teacher home mortgage loan programs, you may be able to finally get approved for the home of your dreams while also saving hundreds to thousands of dollars on your home loan. While these programs may take time to navigate and apply to, they can definitely be worth all the time in the long run. In addition to the programs listed above, if you are a member of a local credit union or teachers union, it may be worth the time to check with them for available programs they may offer to help you purchase your new home.
Hero Home Programs can help navigate the process
At Hero Home Loans, we specialize in helping our local neighborhood heroes, such as teachers, navigate and find all the various programs available to you in your local area. We understand home overwhelming and time-consuming this process can be, and we help our clients navigate a steady pace that leads to home ownership. To learn more about what we can offer, contact us today.
